According to a press release, the survey found automatic enrollment is most common in large plans – with 34.3% of plans with 5,000 or more participants utilizing automatic enrollment, compared to only 3.5% of plans with fewer than 50 participants. In spite of this, employee participation in 401(k) plans was only up slightly from the prior survey (77.7% versus 77%).
Average pre-tax participant deferrals were unchanged at 5.4% of pay for non-highly compensated workers (as defined by the ADP tests), the release said. Pre-tax deferrals for highly compensated workers averaged 6.9% of pay. Catch-up contributions for participants aged 50 and older were permitted in 98% of plans.
Company contributions averaged 4.7% of payroll and were highest in profit sharing plans (9.4% of pay) and lowest in 401(k) plans (2.8% of pay). In plans permitting participant contributions, the most common formula for company contributions was a fixed match only, present in 31.9% of plans (including plans with safe harbor matches). The most common type of company contribution for profit sharing plans was a discretionary profit sharing contribution only, which was present in 74.5% of plans.
The number of funds offered to plan participants continued to increase. Plans offered an average of 19 funds for participant contributions in 2005, up from 18 funds in 2004 and 17 funds in 2003. The funds most commonly offered for participant contributions were actively managed domestic equity funds (80% of plans), actively managed international equity funds (74.8% of plans), indexed domestic equity funds (71.3% of plans), and balanced stock/bond funds (67.5% of plans).
According to the survey, the typical plan had around 70% of assets invested in equities. Assets were most frequently invested in actively managed domestic equity funds (32% of plans), followed by indexed domestic equity funds (9.7%), balanced stock/bond funds (9.2%), and stable value funds (8.9%).
Self directed brokerage windows were offered in 14.3% of plans in 2005, while open mutual fund windows were offered in 8.3% of plans. The survey found 0.6% of plan assets were invested through brokerage windows, and 1.3% of plan assets were invested through mutual fund windows.
The survey included 1,106 plans with more than six million participants and more than $500 billion in plan assets. The survey report can be purchased here for $325 for non-PSCA members and $125 for members.